McDonalds yesterday announced plans to switch its non-US tax base to the UK in a move that could become an early warning sign of the UK becoming an offshore tax haven from the EU post-Brexit, Labour MEPs have warned.

The European Commission is currently investigating the tax practices of McDonalds in Luxembourg after it was alleged they avoided more than €1 billion in tax between 2009 and 2013, while the UK government has recently pledged to have the lowest corporate tax rate in the G20, meaning the rate could drop as low as 15 per cent if President-elect Donald Trump fulfils his own pledge to lower the US tax rate to 15%.

“If McDonalds are relocating their tax base to the UK in order to comply fully with the UK’s 20 per cent corporation tax rate, then we fully welcome their positive move. However, if this is speculation on the UK becoming a tax haven after Brexit, then we must ensure the government publishes any sweetheart tax deal agreed now or in the future.

“We have already seen the UK government continue its drive to levy the lowest possible corporation tax rate in a race to the bottom that shifts the tax burden onto those who can least afford it.

“We should be forcing companies like McDonalds to pay the full and fair tax rate, not legitimising their tax avoidance by lowering the rate to near 0%.

“This is at the same time as the government has failed to tackle burdens like high business rates, which are threatening many businesses’ very viability – unlike corporation tax which applies only to profits.”

Ms Dodds added:

“Average corporation tax rates in Europe have halved since the 1980s and that trend is continuing with no sign of stopping. The UK government must reaffirm its commitment to its European partners that it will continue to work with them on fighting tax evasion and avoidance after Brexit.

“Tax avoidance has no border and it is impossible for the UK to tackle it alone.”